Investing.com -- U.S. crude futures inched down on Wednesday paring earlier gains, after crude inventories rose considerably last week adding to the glut of oversupply in domestic energy markets.
On the New York Mercantile Exchange, WTI crude for November delivery wavered between a low of $44.69 and a high of $45.84 a barrel, before closing at $45.13, down 0.11 or 0.24% on the session. In spite of an extremely volatile month of trading, Texas Long Sweet futures only posted slight gains in September, closing the month up by approximately 1.25%. Over the last 30 days of trading, U.S. crude futures closed in a positive or negative direction by 2% in nearly a dozen different sessions.
On the Intercontinental Exchange (ICE), brent crude for November delivery traded between $47.80 and $48.97 a barrel before settling at $48.36, up 0.12 or 0.18% on the day. After opening the month near $50 a barrel, brent futures fell mildly by roughly 1.5% in September. Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $3.23, above Tuesday's level of $3.00 at the close of trading.
In its Weekly Petroleum Status Report on Wednesday, the U.S. Energy Information Administration (EIA) said U.S. crude stockpiles rose by 4.0 million barrels for the week ending on Sept. 25, significantly above estimates for a 0.5 million draw. It halts a two week streak of draws of at least 1.9 million barrels. At 457.9 million barrels, U.S. crude inventories remain near its highest level at this time of the year in at least 80 years.
In addition, motor gas inventories increased by 3.3 million barrels and are near the upper limit of the average range, according to the EIA, while distillate fuel inventories decreased by 0.3 million barrels on the week. Refineries operated at 89.8% of their capacity last week, as they continue to scale back production following the completion of the summer driving season. Demand indications for gasoline, however, are still high as they remained about 4% higher last week on a year-over-year basis.
U.S. production, meanwhile, fell sharply by 40,000 barrels per day last week, dropping below 9.1 million bpd for the first time since last November. Crashing oil prices have forced U.S. shale producers to slow output dramatically from its levels over the summer when it surged to 40-year highs.
Energy traders also reacted to the start of an air campaign by Russia against the Islamic State in Syria, as well as potential disruptions in the Bahamas from Tropical Storm Joaquin. The targeted air strikes against ISIS, however, might prove to have a muted effect on oil prices. In May, crude production in Syria slumped below 25,000 bpd, a fraction of the 400,000 bpd the Gulf state producer prior to a civil conflict that began in the spring of 2011. A plethora of sanctions by Western powers has limited Syria's exploration and production capabilities, while the nation's largest oil fields, including ones in the Deir-Ez-Zour region have fallen to ISIS, according to the EIA.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, jumped more than 0.4% to an intraday high of 96.56. The dollar was held back by disappointing manufacturing data, as the Chicago Purchasing Managers Index dropped nearly six points to 48.7, falling to a four-month low.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.